The rating agencies S&P Global Ratings and Moody’s Investors Service have affirmed Harnett County’s credit rating. The ratings come in advance of the County’s sale of General Obligation Bonds to fund the construction of the new Erwin Elementary School. The bond sale is planned for June 30, 2020.
The rating announcements came following a review of the County’s current financial outlook with members of the County’s management team.
S&P assigned its AA- long-term rating to the County’s Series 2020 General Obligation School Bonds. The agency also affirmed its A+ long-term rating on the County’s existing Limited Obligation Bond debt and its AA- rating on the County’s existing General Obligation debt, and stated that the County’s outlook is stable. The agency noted “the County enters the national recession triggered by the outbreak of COVID-19 with very strong reserves and well-embedded financial management policies, particularly in the areas of budgeting and planning.”
S&P highlighted the County’s “very strong institutional framework score and strong management with ‘good’ financial policies and practices.” The agency mentioned the County’s strong debt and contingent liability profile, which supports the funding of the new Erwin Elementary School.
Additionally, noted was the County’s very strong budgetary flexibility.
“Harnett County's budgetary flexibility is very strong with an available fund balance in fiscal 2019 of 26% of operating expenditures, or $32.2 million. Over the past three years, the total available fund balance has remained at a consistent level overall, totaling 26% of expenditures in 2018 and 27% in 2017. This level is consistent with the county's reserve policy, which requires maintenance of available fund balance sufficient to cover 15% to 20% of operating expenditures.”
Moody’s Investor Services assigned its Aa2 rating to the County’s Series 2020 Limited Obligation School Bonds. Among the reasons cited for the rating were Harnett County’s “proximity to Research Triangle Park (RTP) and Fort Bragg,” and its “recent tax base growth,” along with the County’s “stable, healthy reserves and liquidity, and manageable fixed costs.” The agency also noted, “the County’s financial position is sound and stable, supported by formal policies and proactive management.”
“We are pleased that these agencies have recognized the efforts of the Harnett County Board of Commissioners and our management team to plan for the future in a fiscally responsible manner,” said Harnett County Manager Paula Stewart. “Even with the economic uncertainty during the COVID-19 pandemic, Harnett County’s strong financial position and proactive planning with our new budget and capital improvements process has allowed the County to continue to support citizen needs during these unprecedented times.”
The $27.5 million bond issuance is part of the $100 million school bond allocation, which was approved by the Harnett County voters in 2014. The County issued $29.5 million of that allocation in 2017 to fund construction of a new Benhaven Elementary School. In addition to the Erwin Elementary School project, County Commissioners have also approved funding for a new elementary school in northwest Harnett County, which will also be funded from the $100 million bond allocation.
Harnett County Board of Commissioners Chairman Howard Penny Jr. thanked County staff for their efforts. “Thanks to County Manager Paula Stewart, Finance Officer Kimberly Honeycutt, and their staff for all the dedicated work that went into preparation for the School Bond Issuance,” stated Penny. “The Harnett County Board of Commissioners and the Harnett County Staff are committed to educating the children of Harnett County, especially those who will benefit from our New Elementary School in Erwin.”